MUMBAI/RIYADH, Dec 11 (Reuters) - Jaguar Land Rover (JLR)
signed a preliminary deal to build a plant in Saudi Arabia,
extending its expansion in fast-growing markets having already
started work on a plant in China.

The British luxury marque, owned by India's Tata Motors
, signed the deal to look at the possibility of making
50,000 Land Rovers a year at a Saudi plant costing some 4.5
billion riyals ($1.2 billion), the country's commerce and
industry ministry said in a statement.

A spokesman for JLR said the agreement was "purely
exploratory" and it was too early to provide any details.

JLR has seen huge demand over the past year from emerging
markets such as China, Russia and countries in the Middle East
for its luxury SUVs and sleek sedans, offsetting sluggish growth
in developed markets.

The company and its Chinese partner Chery Automobile
said last month they had laid the foundation stone
for a factory near Shanghai.

"I can't make any statement for these kind of investment
figures. We have just signed a letter of intent .... it's a
letter of intent to investigate the project," JLR Chief
Executive Ralf Speth told reporters in the Saudi capital.

"A memorandum of understanding is ... scheduled in the next
year and this memorandum of understanding will have more facts
and figures."

DIVERSIFICATION DRIVE

The proposed plant, which will assemble four-wheel-drive
Land Rovers, will likely start up in 2017 and will be located in
Yanbu on the kingdom's Red Sea coast, said Azzam Shalabi, head
of the Saudi commerce and industry ministry's industrial
clusters programme.

Saudi Arabia, which does not have an existing automotive
industry, is seeking to develop local industry to diversify its
economy away from oil exports, leveraging its abundant natural
resources and low electricity prices.

JLR said in its statement it had already identified
opportunities for aluminium component production in the country,
but it did not specify where the investment for the proposed
plant would come from.

The company would not lose British jobs to any new Saudi
plant, Speth said. "If we proceed, it will complement our
existing expansion in the UK and elsewhere," Speth was quoted as
saying in the JLR statement.

For Tata Motors, JLR is a key unit which delivers 90 percent
of group profit. The group's shares jumped last month after it
reported that July-September margins at JLR had improved to 14.8
percent from 14.4 percent a year earlier.

Ratan Tata, outgoing chairman of Tata Group, told a magazine
in September that Tata Motors was looking using local aluminium
production in Saudi Arabia, where Saudi Arabian Mining Co
(Maaden) and Alcoa Inc are building a smelter
scheduled to start production next year.

That smelter is on Saudi Arabia's Gulf coast, across the
country from Yanbu, but Shalabi said a rail link connecting the
two areas would be operational by 2017 to ship rolled aluminium
to the Land Rover factory.